One of InvoCare Limited (ASX: IVC)'s business units saw a stunning 1600% increase in revenue in just 12 months.
The funeral business reported strong numbers for the half-year ending June 30, increasing revenue, earnings and profit. In fact, the results were so good the share price spiked up 8.7% on Monday.
That's despite COVID-19 restrictions hitting the industry hard, especially on the east coast.
But perhaps the success can be attributed to a niche part of InvoCare's operations.
Saying goodbye to our furry friends
In a presentation to the market, InvoCare revealed that its pet cremations business brought in $13.7 million in operating revenue for the June half-year.
That's a stunning 17-fold increase from just $800,000 one year earlier.
According to the presentation, Australians buying more pets during coronavirus lockdowns the past couple of years has given this business a massive boost.
InvoCare also launched an e-commerce platform and invested in new pet cremators in Victoria and Western Australia to improve its capacity.
The company is also working on signing agreements with vet practices to receive business.
The pet cremation unit also saw its operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) rocket from negative $300,000 to $3.6 million for the June half.
The EBITDA margin is now a chunky 27%. The average amount spent on a pet cremation is $332.
COVID-19 still causing great uncertainty for InvoCare
As for humans, funeral numbers remain below pre-pandemic levels.
With Australians largely staying home and practising social distancing, influenza has been suppressed the last 2 winters.
Therefore, InvoCare declined to provide earnings guidance for the current financial year.
But the company reiterated the long-term potential of the funeral industry, citing the ageing population and its strong cash balance.
InvoCare listed on the ASX in 200 and the stock has risen 539% since then. The company's shares have risen nearly 22% in the past 12 months as investors bet on it as a post-COVID 'reopening' beneficiary.
